Super Mario Nation

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Ripples of Space Invaders’ success also reached Atari’s consumer division. Kassar purchased home rights to the game and translated it into a major bestseller for the VCS. In 1979 an Atari coinop engineer created a game in which players cleared asteroid fields with a small free-floating spaceship; Atari would sell 70,000 copies of Asteroids in the United States.

Meanwhile, Midway was busy placing 100,000 units of its new Pac-Man game in North America alone. Other companies followed suit. Atari released Missile Command, Tempest, BattleZone, and Centipede. Williams Electronics, a leading pinball manufacturer, had their biggest hit with Defender. Taito of America, the new U.S. arm of Taito, released Qix, Front Line, and Jungle Hunt. Stern Electronics released Scramble. Nintendo released Donkey Kong, Donkey Kong Junior, and Popeye. The most successful game in U.S. history was an updated version of Pac-Man called Ms. Pac-Man—with more than 115,000 sold.

Video-game arcades became more plentiful than convenience stores. “Pac-Man and Space Invaders were going into virtually every location in the country with the exception of funeral parlors,” says Eddie Adlum of RePlay . “And even a few funeral parlors had video games in the basements. Absolutely true. I believe churches and synagogues were about the only types of locations to escape video games.”

Suddenly video games had become a major force in popular culture. In 1981 Americans spent twenty billion quarters playing 75,000 man-hours on them. The games outgrossed movies and the recording industry. A hit song was written about Pac-Man, and the characters that inhabited the electronic landscapes of Pac-Man, Donkey Kong, and other games appeared on their own television shows in Saturday-morning cartoons.

In his 1983 State of the Union address, President Ronald Reagan defended aid to the Nicaraguan contras by comparing it with the money spent on video games. “The total amount requested for aid to all of Central America in 1984 is about $600 million; that is less than one-tenth of what Americans will spend this year on coin-operated video games.”

For President Reagan to have been correct, every American man, woman, and child would have had to spend almost thirty dollars a year in a video-game arcade. But he missed more than the numbers; the feverish trend itself was winding down at the time he spoke. By June 1982 what the industry still remembers as the golden age had already dimmed. Business softened alarmingly, and by year’s end arcades had begun closing. This downward trend has continued, with only a few positive spikes, for nearly fifteen years.

The home-console market took a brutal beating the next year. VCS sales had been strong for four years despite new competition. In 1979 Mattel, one of the world’s leading toy manufacturers, had entered the market with the Intellivision, a system that offered better graphics and more complex games than the VCS. Mattel sold an impressive 200,000 units in its first full year but barely dented Atari’s market. In 1982 Coleco unveiled the ColecoVision, a sophisticated home console that ran excellent versions of top arcade games. All three companies made enormous profits.

Atari had the largest profits, but they were not enough. In 1982 Atari released two VCS cartridges that cost the company dearly. The first was Pac-Man, the long-awaited but poorly programmed home version of the arcade smash. Atari made twelve million copies of the game, many of which came back from disgruntled customers.

The second cartridge was based on the phenomenally successful movie E.T. According to several sources, Ross forced the game on Kassar after promising the film’s director, Steven Spielberg, a whopping twenty-five-million-dollar royalty for the exclusive video-game rights to the movie. The game was dull and hard to play. In the end Atari created a landfill in a New Mexico desert, dumped in it millions of E.T., Pac-Man, and other cartridges, crushed them with a steamroller, and buried the fragments under cement.

Atari’s profits dropped for the first time in eight years. When, on December 7, 1982, Atari executives revealed that the company had not reached its projections, Warner Communications stock tumbled from fifty-one points per share to thirty-five, and Ray Kassar was fired.

Over the next two years Mattel pulled out of the video-game market, Coleco imploded after investing all its resources in a highly flawed home computer, and Warner Communications sold Atari Home Computers. Under its new ownership Atari managed to limp out of the wreck of the home-console market and even showed a $450 million profit in 1988. However, it never reemerged as a force in the video-game industry, and last year the company was purchased by a disk-drive manufacturer.

Now it was Japan’s turn. In 1985 Nintendo announced that it would restart the American video-game market by releasing a game console called the Nintendo Entertainment System (NES). Though the system was very popular in Japan, American software developers, many of whom were nearly bankrupted by the collapse of Atari, scoffed at the idea. Retailers refused to carry it.